Value investor Scott Black, the founder of Delphi Management, a money management firm he started in 1980, says extended valuations could keep the market at bay.

"Even if you've factored in a 10 percent increase [in earnings] next year to $120 or $121, you're still looking at the high 17s on a multiple basis ... the historical norm is about a 16 P/E, which says that the market is maybe 10 to 15 percent overvalued," Black told CNBC's Mike Santoli during this exclusive interview.

"Now, let's look at the homogeneous classes of small and mid cap. The Russell 2000 right now is 27 times earnings, and the Russell 2500 is 25 times earnings. I mean, these are nosebleed territories. So, again, you have to rely on individual stock selection," the money manager said.

In this wide-ranging conversation, Black, who has over 40 years of financial and investing experience, reveals his top investment ideas, and discusses:

Why his formula for picking stocks hasn't changed.

Areas of the market that remain attractive.

Three of his favorite value picks.

Investment lessons from his multi-decade career.

PRO subscribers can also read the entire transcript of the exclusive interview below.